On Linear Quadratic Approximations

Debortoli, Davide and Nunes, Ricardo (2006): On Linear Quadratic Approximations. Unpublished.

Abstract

We prove the generality of the methodology proposed in Benigno and Woodford (2006). We show that, even in the presence of a distorted steady state, it is always possible and relatively simple to obtain a purely quadratic approximation to the welfare measure. We also show that, in order to do so, the timeless perspective assumption is crucial.

• Item Type: MPRA Paper
• Language: English
• Keywords: Linear-Quadratic Approximation; Distorted Steady State; Timeless Perspective
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods and Programming > C60 - General; E - Macroeconomics and Monetary Economics > E0 - General

References

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